• 19Dec

    Dear reader,

    Without a doubt, 2008 has been a challenging year. However, I have found several reasons to be optimistic in the coming 2009:

    -Many of us are still working, despite a global financial crisis that is expected to cost 20 million jobs by the end of the year.

    -Most of us can still bring food to our tables, despite food crises that have pushed 40 million people into hunger, bringing the number of undernourished in the world closer to a billion.

    -All of us are still able to enjoy Summer, despite 2008 set to be the 10th warmest on record for the globe.
    -A great majority of us still believe that 2009 will be better than this year, despite published contrary opinion.

     

    Further, it is not only OK to be cheerful in these conditions: it is a survival mechanism. According to a USA TODAY article, anger, fatigue, sleeplessness, overeating and overmedication are all consequences of money-related stress in 2008.

    And sick people is not exactly what our economy needs to be reactivated (except the health sector, which should do well in a scenario of financial stresses and worn-out workers).

    Right, I admit that this is a sweet-and-sour collection of thoughts. Here are some other plainly optimistic reasons that make me look forward to 2009:

    -The stimulus plans set by Obama, Rudd and others may work.

    -Consultancies such as R.W. Baird and Standards & Poor’s believe that the market has already hit rock bottom and markets and economies should stabilize by mid-2009.

    -According to the latest Australian Commodities Outlook (ABARE Dec 08), export earnings for Australian agricultural commodities are not expected to be severely affected in 2008-09. Food consumption in the OECD economies is relatively insensitive to income changes.

    -Further, it is predicted that beef and live cattle exports will increase in 09. The gross value of horticultural production is also expected to increase in $1,228 million  with respect to last year’s production.

    I could go on analysing statistics and reports to extract some drops of optimistic data. But you, dear reader, are probably sick of statistics and you are heading off to celebrate with some beers the end of another calendar year with your work colleagues.

    So let’s just finish this posting with one thought in mind: life is always challenging. Life will go on in 2009. It is up to each of us to make it a fruitful, memorable year. So here it is, my final posting of the year hoping that we all find the strength to stretch our skills just a little bit more every day. Here’ s hoping that we all find more beauty and wonders in 2009.

    Cheers and I will see you in January.

    Silvia Estrada-Flores

  • 15Dec

    The Australian Government released today the White Paper that outlines the final design of the Carbon Pollution Reduction Scheme and the medium-term target range for reducing carbon pollution.

    This paper follows from the Green Paper (i.e. the Garnaut’s review report), released in July 2008, which canvassed options on the design on the scheme.

    The report is presented in 2 volumes: Volume 1 describes the policy context and background of the carbon reduction scheme. Vol.1 also describes the emission targets and the actual measures to achieve and uphold the targets. Volume 2 describes the assistance measures, tax and accounting issues and transitional aspects.

    An immediate conclusion from the report is that the goal is to cut emissions by 15% by 2020, but only if major economies agree to substantially restrain carbon pollution and advanced economies take on reductions comparable to Australia. If no pact is signed, Australia will unconditionally achieve a 5% cut in emissions, as compared with 2000 levels.

    However, the Government confirmed its commitment to a long-term goal of reducing Australia’s greenhouse gas emissions to 60% below 2000 levels by 2050.

    The Government’s intention is to commence the Carbon Pollution Reduction Scheme on 1 July 2010. The Scheme, which will be a cap-and-trade type, will be Australia’s primary policy tool to drive reductions in emissions of greenhouse gases. The generic mechanics of the C&T scheme are:
    (A) Emitters of GHG need to acquire a permit for every tonne of GHG that they emit.
    (B) The quantity of emissions produced by firms will be monitored, reported and audited.
    (C) At the end of each year, each liable entity will need to surrender a permit for every tonne of emissions that they produced in that year.
    (D) The number of permits issued by the Government in each year will be limited.
    (E) Firms will compete to purchase the number of permits that they require. Firms that value the permits most highly will be prepared to pay most for them, either at auction or on a secondary trading market. For some firms, it will be cheaper to reduce emissions than to buy permits.
    (F) Certain categories of firms will receive an administrative allocation of permits, as a transitional assistance measure. Those firms could use the permits or sell them.

     

    Some other aspects of the White Paper relevant to food chains are:

    VOLUME 1

    (1) As expected, the Scheme will not cover emissions from agriculture. The agricultural sector is characterised by thousands of small emitters and the calculation of emissions is complex, so it would not be practical at this stage to cover those emissions directly. However, agriculture’s eventual inclusion in the Scheme is desirable, if it can be cost-effectively achieved.Commencing in 2009 the Government will undertake a work program to enable it to determine in 2013 whether or not to cover agriculture emissions from 2015.

     

    (2) Emissions from on-site waste-water treatment are significant at industrial facilities that process goods with a high organic content (e.g. food processing plants). The Government has decided that Scheme obligations will apply to on-site waste-water treatment from the following nine industrial sectors:
    • dairy production
    • pulp and paper production
    • meat and poultry processing
    • organic chemicals production
    • sugar production
    • beer production
    • wine production
    • fruit processing
    • vegetable processing.

    A number of firms with waste water emissions are in the agricultural sector. Note that while agriculture emissions will not be covered from Scheme commencement, the sector is responsible for other emissions, such as transport, energy and waste emissions.

    (3) The Government acknowledges that the Scheme may result in competitive distortions between facilities on either side of the threshold, particularly within the meat processing industry. However, rather than reducing the threshold to capture more treatment plants into the Scheme, the Government advocates for the use of abatement technologies by industrial food processors to reduce their emissions from waste water, potentially bringing facilities below the Scheme threshold. Entities in all industries will be eligible to apply to access the Climate Change Action Fund to implement new low emission technologies.

    (4) Submissions from the agricultural industries expressed concern about the potential for land use change from agriculture to forestry. A shift towards less emissions-intensive activities, including farm forestry, is an intended consequence of the Scheme as it would reflect an efficient allocation of resources taking into account the carbon price. However, new forests are likely to be established on more marginal or less productive agricultural land and will not undermine food security.

    (5) With the aim of promoting the rapid development of the carbon market, the Government will not place restrictions on who may hold permits. Permits may be held and traded by any legal or natural person (subject to verification of identity and measures to prevent criminal activity). There will be no restriction on foreign ownership of permits, apart from any that might apply under a law other than the Scheme legislation.

    (6) Further, subject to the lodgement of any required deposit and having a registry account, universal participation will be permitted at auctions.

    VOLUME 2

    (7) On the basis of the industry level assessment conducted for the Green Paper analysis, if the Scheme’s coverage is extended in 2015 to include agricultural emissions, there are several agricultural sectors that are likely to be eligible for emission-intensive trade-exposed industries (EITE) assistance including the production of beef cattle, sheep, dairy cattle, pigs and sugar cane.

    (8) In regards to investment in energy efficiency and low emission technologies, there will be three sub-programs to provide grants and incentives for businesses and community groups to invest in energy efficiency projects and low emissions technologies, processes and products: The Small Business Capital Allowance (SBCA), the Community Organisation Capital Allowance (COCA) programs and the Innovation in Climate Change sub-program (ICC).

    (9) The SBCA program will provide small business with assistance to invest in energy efficiency equipment (for example efficient hot water systems; improved insulation; efficient lighting, motors and drives; combined heat and power equipment; heating, ventilation and air conditioning; and refrigeration equipment) that meets established energy saving criteria. Detailed program guidelines and eligibility criteria for this measure will be developed in the first half of 2009.

    (10) The COCA program will provide community organisations with assistance to invest in energy efficiency equipment that meets established energy saving criteria. Detailed program guidelines and eligibility criteria for this measure will be developed in the first half of 2009.

    (11) The ICC program will provide competitive grant funding to contribute to the cost of innovative low emission technologies, production methods, supply-chain improvements or products, and energy savings projects with long pay back periods.The competitive funding rounds will begin in late 2009. Any cap to be placed on grants made under this program, co-contribution levels and program eligibility criteria will be determined in the first half of 2009. This program will complement the Government’s existing range of energy technology specific funds such as the Renewable Energy Fund, Energy Innovation Fund, the National Low Emissions Coal Fund, Re-tooling for Climate Change and the Green Building Fund.

  • 01Dec

    Senator Kim Carr, Minister for Innovation, Industry, Science and Research, released on the 28th Nov the new guidelines for the Australian Government’s Cooperative Research Centres (CRC) Program and launched the 11th CRC selection round. The new guidelines follow the comprehensive review of the program conducted by Professor Mary O’Kane.

    The new guidelines are available here.

    Some key changes include:

    1) Support to end-user, public good (social and environmental benefits) CRC Programs;

    2) Scope of activities supported includes:

    -medium to long-term, end-user driven collaborative research;

    -focused education and training programs, including PhD programs;

    -innovation and/or research and development capacity within end-users;

    -global research and education engagement;

    -SMEs strategies that build their innovation and/or R&D capacity; and
    -utilisation activities to deploy research outputs and encourage take up by end-users;

    3) Participation from all industry and community sectors and all research disciplines including humanities, arts and social sciences is encouraged.

    4) A CRC is to include at least one Australian higher education institution and one Australian end-user as essential participants.

    5) Flexible governance and management arrangements, including for intellectual property (IP), with greater clarity of requirements and placing the responsability on applicants to demonstrate the merits of their proposed arrangements.

    6) Funding for a CRC’s activities will be provided for varying periods up to 10 years. Funding will be contingent on satisfactory outcomes of rigorous reviews by an independent panel of experts.

    7) In exceptional circumstances, CRCs may re-apply for further funding, not exceeding 15 years of funding, after which the CRC would be required to exit the Program.

    8) Eligibility to apply for further funding would be subject to a rigorous review as well as a competitive selection process.
    9) There is no specific limit to funding available for each new CRC under the CRC Program. The total amount of funding available to the Program is limited by Appropriation.

    10) CRCs established from 2009 are required to undergo a rigorous independent performance review normally during the CRC’s 4th and 8th years of operation.

  • 17Nov

    I have been away in the past 6 weeks, attending the annual conference of the Council of Supply Chain Management Professionals in Denver. After the conference, I travelled to California to visit five vegetable processing plants, a distribution centre and a pallet distribution and service centre.

    I also had meetings with colleagues from IEH Labs, ARS USDA, NSF-Davis Fresh, and the Agriculture and Water Quality Alliance. These meetings dealt with food safety and environmental aspects of the horticultural production in North California.

    My attendance to the conference and the site visits were supported by the LDA award, promoted by the Logistics Association of Australia (LAA) and sponsored by CHEP Asia Pacific. I gratefully acknowledge their support. I will share some of my experiences in a breakfast meeting organised by LAA in February 09 and in a series of articles to be published in Dispatch, the official LAA newsletter. Stay tuned to this blog and the LAA website for further details.

  • 30Sep

    The long awaited report is now available here. Paragraphs relevant to the agri-food industry are:

    CHAPTER 6: CLIMATE CHANGE IMPACTS ON AUSTRALIA

    “By mid-century, there would be major declines in agricultural production across much of the country. Irrigated agriculture in the Murray-Darling Basin would be likely to lose half of its annual output. This would lead to changes in our capacity to export food and a growing reliance on food imports, with associated shifts from export parity to import parity pricing.”

    “The adverse health impacts of climate change will be greatest among people on lower incomes, the elderly and the sick.[..] The main health risks in Australia include: • impacts of severe weather events (floods, storms, cyclones, bushfires)• impacts of temperature extremes, including heatwaves • vector-borne infectious diseases (for example, dengue virus and Ross River virus) • food-borne infectious diseases (including those due to Salmonella and Campylobacter) • water-borne infectious diseases and health risks from poor water quality • diminished food production and higher prices, with nutritional consequences • increases in air pollution (for example, from bushfire smoke) • changes in production of aeroallergens (spores, pollens), potentially exacerbating asthma and other allergic respiratory diseases • mental health consequences and the emotional cost of social, economic and demographic dislocation (for example, in parts of rural Australia, and through disruptions to traditional ways of living in remote Indigenous communities).”

    “Weather extremes and large fluctuations in rainfall and temperatures have the capacity to refashion Asia’s productive landscape and exacerbate food, water and energy scarcities in Asia and the south-west Pacific. Australia’s immediate neighbours are vulnerable developing countries with limited capacity to adapt to climate change.”

    “Climate change is likely to affect food production in the Asia–Pacific region for five main reasons: • Increased temperatures could reduce crop yields by shortening growing seasons and accelerating grain sterility in crops. • Marine ecosystems could experience major migratory changes in fish stocks and mortality events in response to rising temperatures. Fish is the primary source of protein for more than one billion people in Asia. • Shifts in rainfall patterns could disrupt flows in rivers used for irrigation, accelerate erosion and desertification and reduce crop and livestock yields. • Rising sea levels could inundate and make unusable fertile coastal land. • An increase in the intensity or frequency of severe weather events could disrupt agriculture.”

    ” The Consultative Group on International Agricultural Research (2002) has predicted that food production in Asia will decrease by as much as 20 % due to climate change. These forecasts are in line with IPCC projections showing significant reductions in crop yield (5–30 % compared with 1990) affecting more than one billion people in Asia by 2050″.

    “Poorer countries with predominantly rural economies and low levels of agricultural diversification will be at most risk. They have little flexibility to buffer shifts in food production. Higher worldwide food prices associated with climate change, its mitigation and other factors will diminish the opportunity to seek food security from international trade—compounding biophysical constraints on production and negatively affecting both rural and urban poor”.

    “In these circumstances, in the absence of international food trade liberalisation, it is likely that price volatility on world markets will increase, especially at times of pressure on global food supplies. Freer and more deeply integrated international markets for agricultural products would be a helpful adaptive response.”

    CHAPTER 7: AUSTRALIA’S EMISSIONS IN A GLOBAL CONTEXT

    CHAPTER 14: AN AUSTRALIAN EMISSIONS TRADING SCHEME
    “Australia’s emissions can be classified as coming from the following sectors: stationary energy; transport; fugitive emissions from fuel production; industrial processes; waste; agriculture; and land use, land-use change and forestry.”

    “Emissions from stationary energy, transport,5 industrial processes and fugitive emissions from fuel production can be accurately measured or estimated at reasonable cost and should be covered by an Australian emissions trading scheme commencing in 2010.”

    “Inclusion of forestry, agriculture and land management on the earliest possible timetable is also desirable. The treatment of these sectors is of large consequence for the Australian and global mitigation efforts.”

    CHAPTER 15: ADAPTATION AND MITIGATION MEASURES FOR AUSTRALIA

    “Some particular domestic and international markets will be especially important to Australia’s adaptation response, and potentially to our capacity to smoothly adjust to the effects of a carbon price. These markets may require increased policy attention. Included in this category are markets for insurance, water and food.”

    Food markets

    “The global agricultural sector will be adversely affected by climate change in the absence of effective mitigation. It is likely that the levels and volatility of prices on world markets will increase. The recent global food price crisis provides an indication of how things could develop. In future, it is likely that international food markets will face multiple supply shocks with resulting impacts not unlike those recently witnessed.”

    “If Australia becomes increasingly dependent on food imports, as projected under a best-estimate no-mitigation case, rising global food prices and price volatility could become increasingly important issues for consumers.”

    “Traditionally, trade tariffs, subsidies and quarantine restrictions have been the primary obstacles to efficiently functioning food markets. With food prices soaring and in the face of mounting political pressure, recent policy changes by major foodexporting countries have increased barriers to trade. The most notable of these have been increased export restrictions (or similar restrictions) and domestic price controls. Export restrictions [..] increased international food prices sharply. Domestic price controls [..] reduce the incentive for producers to increase supply, thereby exacerbating shortages and pushing global prices even higher. Price controls may yield short-run political benefits, in countries imposing them, but not in the rest of the world. In the longer term, these benefits are likely to be outweighed by the damaging effects on economic efficiency:.

    “It is in Australia’s long-term interest to pursue the liberalisation of international food markets by removing the distortionary policies of the world’s future food importers and suppliers.Australia would benefit from broader and more open and reliable global food markets as an exporter. It would benefit as a neighbour of developing countries that are from time to time reliant on supplies from international markets. And it would benefit in food security if, as it may, climate change makes Australia a large importer of food.”

    “It is also in our long-term interest to ensure that barriers to import such as unnecessarily restrictive quarantine measures do not unnecessarily prevent goods from overseas entering our domestic markets. The banana market in the aftermath of Cyclone Larry in North Queensland in March 2006 illustrates how restrictions on trade can lead to extreme price fluctuations in response to supply checks.[..] Australia needs to be sure that the restrictions are justified—especially in circumstances in which supply shocks are likely to be more important.”

    “By 2100 under a best-estimate no-mitigation case, the economic production of irrigated agriculture in the Murray-Darling Basin is projected to fall by 92 %; under the hot, dry extreme case, production falls by 97 %. Under such outcomes [...]the only viable adaptation response might be to abandon established patterns of agriculture.”

    CHAPTER 17: INFORMATION BARRIERS TO KNOWN TECHNOLOGIES

    “Mandatory disclosure should be applied to goods where it is cost effective to do so. This will be determined largely by the administrative cost of the scheme, its accuracy and the potential savings to consumers. The potential for accurately and cheaply rating energy use will vary between goods. For refrigerators, it is relatively cheap to assess their energy use—most households’ patterns of using a refrigerator will have limited effect on the comparative efficiency of different models.For vehicles, the situation is more complex, as a driver’s behaviour may influence the efficiency of some cars relative to others, but even partially accurate ratings are likely to be valuable.”

    “Governments should continue to implement the energy label program for appliances where energy consumption is substantial and there is significant variation in performance. These include refrigerators, freezers, washing machines, water heaters, televisions and air conditioners”.

    “The National Mandatory Efficiency Performance Standards for refrigerators and freezers were introduced in Australia in 1999 and revised in 2005. This set of standards removes appliances from sale that do not meet minimum benchmarks of energy efficiency. Retrospective analysis in 2006 estimated that these policies saved more than 3000 gigawatt-hours of energy by 2005, savings that were 34 % higher than was forecast in the original Regulatory Impact Statements. [..]the Minimum Energy Performance Standards scheme for appliances should focus on removing poorly performing products with considerable energy consumption and significant variation in performance, without eliminating features that consumers value.”

    CHAPTER 18: THE INOVATION CHALLENGE

    “A variety of new technologies and practices are potential contributors to Australia’s mitigation task. They include: • energy efficiency—electrical equipment, fixed appliances, and building materials and design • electricity generation—geothermal (hot rocks), improved generation efficiency (e.g. coal drying), and solar (photovoltaic and thermal) • transport—lower-emissions vehicles, second- and third-generation biofuels (including from mallee and algae) and biomass, and electric cars • agriculture and forestry—anti-methanogen technologies for livestock producers, altered savanna management, and nitrification inhibitors • sequestration—soil sequestration (biochar and mallee), geosequestration and algal sequestration.”

    “Commercial agriculture in Australia often requires imported agricultural technologies to be adapted to Australian conditions, with high levels of government participation in research and the dissemination of information”.

    “Reliable information about the impacts of climate change will be needed for the continued development of new adaptation technologies. Those areas that will play a direct and significant role in Australia’s adaptation challenge include: • agriculture—use of improved seasonal forecasts, heat tolerant crop cultivars, and different methods of crop and livestock management • the built environment—more resilient building materials, climate-appropriate building design and more efficient heating, ventilation and air-conditioning systems • biodiversity—connectivity corridors and conservation methods. Some technologies, such as those that improve the thermal properties and energy efficiency of buildings, contribute to both the adaptation and mitigation efforts.”

    “Research in adaptation technologies is critical for the agriculture sector as impacts will be increasingly severe in a future without mitigation.”

    “Early research in agriculture is an area of strength in Australia. In 2006–07, 22 % of all government expenditure on research and development could be attributed to research in plant and animal production and primary products, while environmental management accounted for a further 18 %”.

    “Various research organisations are already undertaking work on improving our technological responses to the effects of climate change, but better outcomes in the resilience of buildings, energy efficiency and water efficiency will require greater uptake of existing technologies rather than further research and development of new technologies.”

    “There is a case for a specialist research body related to low-emission technology, to elevate, coordinate and target Australia’s effort in this field. Such a body could operate in a similar way to the National Health and Medical Research Council (NHMRC), overseeing a large expansion of effort in early research for low-emissions technologies, and operating independently to correct market failures.”

    “Additional funds for early research in low-emissions technologies could come from the revenue from the auctioning of emissions permits. The allocation of a consistent level of annual permit revenue towards this public good research could form the major portion of funds to be allocated by the proposed research council.”

    “Two important criteria should underlie any funding decisions in early research: (1) Is this area of research of national interest? (2) Is this an area of early research where Australia has a comparative advantage?”

    “Australia should only fund early research aligned with its national interest. In the case of climate change mitigation, considerations should be based on both current circumstances and future projections, and could include:

    • Australia’s emissions profile—The high emissions intensity of electricity generation and the high levels of emissions from agriculture are two examples of unusual characteristics of Australia’s emissions profile.

    • Technological solutions particular to local conditions—Many technologies can be adopted from overseas and applied to the Australian context. The deployment of wind turbines from Europe and any future use of nuclear power are examples. However, some technologies will be subject to local factors, including geography, geology and climatic conditions.

    • Sources of Australia’s economic prosperity—Sectors that are important sources of economic prosperity today or could become sources of economic advantage in the future have a broad strategic value for Australia.

    • Technologies that build on Australia’s natural resources—Australia is in a unique position among developed countries of having an abundance of a wide range of natural resources that are relevant to low-cost transition to a lowcarbon economy (for example, solar, wind and geothermal sources of energy).”

    “Australia should only undertake early research in areas where it has a comparative advantage.[..] Australia’s demonstrated strength in agricultural research is an example of an area of clear comparative advantage.”

    “Rural research and development corporations and companies are a major vehicle for driving the development of new adaptation technologies in the agriculture sector.[..]Benefits include improvements in on-farm production; the development of new products for emerging markets; better management and use of water and natural resources; building and developing rural skills; building research and development capacity; and improving biosecurity.”

    “Agricultural research in Australia is undertaken by public sector research organisations, notably the CSIRO, cooperative research centres, universities and agencies within the primary industries portfolios at federal and state levels. The demand for new technological solutions in the light of future climate change impacts will test the research capabilities of these institutions”.

    “[..]it is important to create a longterm, stable and consistent strategic framework to promote investment in lowemissions technologies.[..] A clear, credible and consistent policy framework will provide investors with long-term signals, and incentives to deal with the challenge of technological lock-in, accelerating Australia’s technological transition to a low-carbon economy.The most important overarching policies for creating investor confidence and overcoming technological lock-in are the long-term emissions trajectory and the emissions trading scheme. Policy certainty and long-term investment signals can be backed up by strengthened international policy action that enhances domestic policy credibility”.

    CHAPTER 22: TRANSFORMING RURAL LAND USE

    Effects on global food supply and demand

    “The melting of glaciers, leading to sealevel rise, and changes in river flow and monsoon rainfall, are likely to severely affect agricultural production, particularly in Asia. South Asia, sub-Saharan Africa and Australia have been identified as having agricultural sectors that are especially vulnerable to the impacts of climate change.”

    “Domestic food production in many developing countries will be at immediate risk of reductions in agricultural productivity due to crop failure, livestock loss, severe weather events and new patterns of pests and diseases. Climate change could disrupt ocean currents, which would have serious ramifications for the availability of fish, a major protein source.”

    “Farmers in developing countries are less able to adapt to and effectively manage these risks due to the higher proportion of small-scale and subsistence farms, poorly developed infrastructure and lesser access to capital and technology.”

    “These impacts, together with the considerable increases in population and food demand expected in developing countries, will lead to an increase in global food prices.”

    “In Australia, some agricultural industry subsectors will be more vulnerable than others to climate change impacts (see Table 22.1). Enterprises already close to the edge of the ideal climatic range for their dominant agricultural activity will be particularly at risk.Changes to local climate and water availability will be key determinants of where agricultural production occurs and what is produced. Climate change is expected to reduce yields for many crops and place upward pressure on Australian food prices. Climate change impacts will also drive a range of adaptation measures.”

    Biofules and energy

    “If domestic production of bioenergy were to increase, there could be greater competition for land that is currently assigned in the model to food or forestry production.”

    Livestock production

    “In Australia, enteric fermentation emissions from livestock (mainly sheep and cattle) account for about 67 per cent of agricultural emissions.Cattle and sheep production also accounts for a significant proportion of emissions from agricultural soils, and beef production is responsible for some emissions from savanna fire and land clearing.”

    “Breeding pattern manipulation, better location of watering points and greater use of products that promote growth can all increase productivity without increasing food consumption and resultant emissions. These activities are already widely practised.”

    “The addition of monesin, dietary fats and lipids can reduce ruminant emissions by 20 to 40 %t. Nitrous oxide emissions from livestock can also be reduced through dietary changes. These options are technically feasible, but are generally not yet cost effective.”

    “Over time, consumption patterns in Australian households are highly responsive to changes both in price and conditions of supply . Australian consumer preferences have changed over time, and will continue to change into the future.”

    “By 2020 beef cattle and sheep numbers in the rangelands could be reduced by 7 million and 36 million respectively, and this would create the opportunity for an increase in kangaroo numbers from 34 million today to 240 million by 2020[..] meat production from 175 million kangaroos would be sufficient to replace the forgone lamb and beef meat production[..]”

    “There are promising research avenues for reductions in agricultural emissions. Large-scale, and widely shared, public good research in this area is warranted.”

    “The transaction costs of full inclusion of agriculture in an emissions trading scheme would be high. There are around 130 000 agricultural establishments in Australia, each with a diverse emissions profile. Inclusion of agriculture in an emissions trading scheme will involve a trade-off between accuracy and cost. Both will be significantly influenced by the threshold set for coverage and the point of obligation. There will be a large role for collective action among farmers, or private broking functions, to reduce the costs of individual farmers’ interaction with an emissions trading scheme.”

    CHAPTER 23: TOWARDS A LOW-EMISSION ECONOMY

    International food markets

    “The world, and Australia, will need deep and flexible global food markets to manage the fluctuations and changes in supply conditions in response to climate change and its mitigation.Population growth, greater variability in climatic conditions, and the effects of climate change on agriculture will make Australia economically a food importer from time to time, perhaps even under normal conditions. The new global challenge of climate change adds to the good reasons for giving priority to resolving the old problem of distorted global agricultural markets.”

    Global mitigation and ongoing prosperity

    “The development in Australia of low-emissions technologies in the energy and agriculture sectors in particular will provide a basis for Australian businesses to play leading roles in innovation associated with the low-emissions transition in many countries, and especially in the Asia and the Pacific. The importance of export of related services from Australia would be enhanced by early establishment in Australia of efficient and extensive mechanisms in support of research, development and commercialisation of the new technologies.”

    “Australia’s advantages in resource availability and sophisticated skills in critical areas of resource development, engineering and financial management are likely to ensure that we remain a strongly competitive suppler of commodities.”

  • 23Sep

    The Minister for Trade, Simon Crean, announced the release of “Winning in World Markets: Meeting the competitive challenge of the new global economy”,  the report from the independent Review of Export Polices and Programs. The Government initiated the review in February 2008 and was undertaken by Mr David Mortimer AO and Dr John Edwards.  Mr Crean also tabled in Parliament the review of the EMDG scheme that was prepared as part of the broader review.

    GENERAL RECOMMENDATIONS

    The report has over 70 recommendations, which are summarised in the following boxes (as presented in the report):

    We highlight below the parts relevant to the agricultural and food industries.

    DRIVERS FOR EXPORTS

    Australia has lost global market share in manufactures, services, agriculture and resource exports. After rising rapidly in the 1980s and 1990s, the share of exports in our GDP has declined.

    In addition to the drought, the poor agricultural sector’s export performance can be attributed to four main factors:

    1) Infrastructure problems, particularly with rail freight
    2) A long-term decline in the real prices of agricultural commodities
    3) Shortages of skilled labour
    4) Continuing high levels of protectionism,including new technical trade barriers, such as unjustified quarantine measures or standards that limit access to markets.

    With factors such as higher world food prices and the Government’s commitment to lifting the productive capacity of the economy, there are major opportunities for the agricultural sector to improve exports. There are a number of areas, however, in which the industry itself needs to take action to increase its export capacity, for example in the horticulture sector.

    Rural exports can be expected to recover as the drought eases and resource exports will pick up as capacity constraints are overcome, with the likelihood of repeated trade surpluses in 2008 and 2009. But commodity export growth will moderate from the high levels expected in the short term. Australia needs to prepare for this eventuality and put in place the foundations for a sustained improvement in exports.

    There is evidence to suggest that export industries and successful exporters within industries have higher productivity levels than those focused only on the domestic market. This is hardly surprising, as international competition is the most common way in which new technologies, new management and marketing techniques, and new business styles are discovered, adapted and incorporated. There are, therefore, good reasons for concern if a nation’s export performance falters.

    The sequence of large trade and current account deficits over the last three decades has led to a sharp increase in external liabilities compared to GDP. Improving our export performance is a necessary part of slowing the growth of foreign liabilities to a sustainable pace.
    SPECIFIC RECOMMENDATIONS FOR THE FOOD SECTOR

    The Review believes that important priorities should include the rapidly growing markets of the Asia–Pacific region, the development of services exports, the pursuit of niche markets for elaborately transformed manufactures, and the search for new markets for high-value agricultural and food exports.

    The Review also support the development of export strategies for elaborately transformed manufactures, including technology-intensive sectors. High priority areas mentioned in the report include automotive industry products, medical and scientific instruments, processed food, renewable and low-emissions energy goods, services and technologies.

    The momentum for global action on climate change—and Australia’s leading role in those efforts—creates opportunities for zero and low-emissions technologies, particularly in the Asia–Pacific region

    The Review included an industry survey to evaluate the impact of free trade agreements with Singapore (SAFTA), Thailand (TAFTA) and the United States (AUSFTA) on business growth. It was apparent that the experiences of food exporters who responded to the survey had generally been the most positive. Some smaller manufacturers had found important new outlets as a result of an FTA and were also interested in additional market access opportunities flowing from future agreements.

    The Review notes the establishment of various ‘one-off’ export facilitation initiatives over time—for example, the National Food Industry Strategy. The report states “While there is merit in specific industry development initiatives, there is no basis for replicating existing trade facilitation programs for individual sectors”.

    Therefore, the report recommends the following: “Recognise Austrade as the focus of all Commonwealth Government export and investment facilitation and promotion activities. Support this arrangement with a clear and consistent framework of service delivery agreements and a consistent approach to performance measurement for all trade and investment development activities across government.”

    EXPORT MARKET DEVELOPMENT GRANTS -REVIEW OF THE PROGRAM

    As part of the Review, the efficiency of the EMDG scheme as an instrument to encourage Australian small and medium sized enterprises to enter and develop sustainable export markets was assessed. The grant reimburses up to 50% of eligible export promotion expenses above a threshold of $10 000. A scheme participant is limited to eight taxable grants, each grant being between a minimum of $5000 and a maximum of $200 000.

    Key recommendations for the EMDG were:
    • Equip Austrade to advise new exporters and offshore investors on appropriate sources of financial advice.

    • Continue the Export Market Development Grants scheme as a capped program, with either the cap adjusted to match demand against current eligibility criteria or eligibility adjusted to meet the current cap.

    • Tighten the EMDG scheme provisions by reducing the number of grants from eight to five and increasing the minimum threshold to $30 000.

    • Implement changes to provisions of the EMDG scheme and eligibility criteria to reflect the contemporary needs of Australian businesses growing internationally.

    • Review the effectiveness of the EMDG scheme at regular intervals (but not more frequently than every five years).

    • Enact a limited expansion of the Export Finance and Insurance Corporation’s powers to support Australian companies seeking to invest offshore, where these companies are small and new to offshore investment and have a sound business case, and where the private banking sector is unwilling to provide support.

    • Review the appropriateness and effectiveness of EFIC’s new services after two years.

    • Ensure that financial assistance programs are well-designed and well-targeted against a consistent set of criteria and objectives.

    • Phase out assistance that is not directed at demonstrated market failures and does not result in exports that are markedly greater than would be achieved without that assistance.

    • Promote awareness of financial assistance programs through cooperative approaches between Austrade, state and territory governments and the Export Finance and Insurance Corporation and with commercial financial service providers.

    • Establish a consistent set of measures to assess the relative effectiveness and efficiency of all financial assistance mechanisms.

  • 18Sep

    The New Zealand Ministry of Agriculture and Forestry recently released the report “New Zealand Fast Forward (NZFF): Science, Food, Farms. Establishment Group. Report on Proposed Governance Structure”. The report outlines the basis of collaboration between government, industry and research providers to lift the long term science base, capability, environmental performance and competitiveness of the country’s pastoral and food industries.

    The report highlights the similarities amongst the economies of Finland, Sweden, Norway, Denmark, Iceland, the Netherlands, Canada, Australia and New Zealand, which are all heavily reliant on natural resources such as agriculture, forestry and fishing. Interestingly, the European countries mentioned have managed to develop knowledge-based industries and high tech sectors in parallel with their rural industries. Therefore, these countries have successfully leveraged industries with low technological levels by transferring knowledge and innovations created in the high tech industries.

    The NZFF will be a long-term strategic partnership between industry and government. It will:

    • develop a shared vision of transformational change in the pastoral and food sector, to achieve a sustainable future;
    • identify key work programmes in which partners will collaboratively invest; and
    • improve links between our producers and manufacturers; education, science and research providers; and the demands of the global market from primary resources through to the final consumer.

    The New Zealand government has established a $700 million fund especially for this initiative, the capital and interest earnings of which will be invested over the next 10-15 years. Industry will match this investment over the same period, resulting in a combined investment of around $2 billion.

    Areas of focus in NZFF include:

    • Sustainable Production Systems: increasing the productivity (i.e. production and profitability) of pastoral systems, while reducing environmental impacts. This could lead to new technologies and management systems that could be commercialised globally;
    • Research and education capability: building capability in R&D and agribusiness for the pastoral and food sectors, which would increase the supply of skilled people to the wider pastoral and food industries;
    • Food innovation: (flowing from the Food and Beverage Taskforce), providing a co-ordinated network of innovation and commercialisation centres based around open-access pilot scale food processing and production facilities, to focus on advanced nutritional and functional foods; and
    • Internationalisation: facilitating firms within food, pastoral and related industries to become globally competitive companies.

    The document presents an example of how NZFF would operate, using a hypothetical example programme entitled “Innovative Foods”, which would seek to cover a range of projects and sub-programmes on advanced nutritional and functional foods.

    There are SMART objectives, such as “By 2030 the returns from the pastoral & food industries will have tripled (in 2008 dollars)”.  A second objective perhaps harder to evaluate is “50% of these extra returns will come from added value products”. Measures to monitor and evaluate these objectives are also suggested.

    This NZ initiative is similar to the Australian NFIS Ltd initiative (closed in 2007), in that investment decisions on food innovation from public and private sources are made using an overarching strategy. This strategy is dictated by a company (NZFF Ltd) with a board of directors drawed from private and public sectors.

    I think that the NZFF initiative is a timely initiative, which can greatly benefit the NZ economy in the near future. Particulalry in the context of global food supply issues and environmental concerns.

    As an economy based on agricultural industries and rich in natural resources, I believe that Australia would also benefit from an NZFF-like appproach. The National Innovation Review report recognises that there is an opportunity in building on the strengths of Australia’s natural endowments. Therefore, rather than resenting our agricultural past and reinventing ourselves as a knowledge economy to become “more innovative”, we should aim to grow the knowledge and agricultural industries together, perhaps through an exchange of innovation and market oportunities between the two. Finland and the Netherlands show that these two sectors can indeed support each other. 

    Further, I believe that if these aspects are not examined and acted upon in 2009, we will have missed the opportunity and lag considerably behind other countries (e.g. NZ).

    Are there opportunities to collaborate and exchange experiences with countries already on the path of lifting the agricultural and food industries competitiveness through innovation? Should we aim to build on synergies with NZ and other Asia-Pacific countries on this area? 

    Other points that I believe we need to consider (and perhaps the NZFF ougth to consider) are:

    (a) The use of a whole-of-the chain concept, whereby retailers and growers play a significant role on the development of the strategic vision for agricutlural and food industries.
    (b) Examining the role of Government as an “innovation buyer” through government procurement contracts.
     

  • 16Sep

    The 1st IIR International Cold Chain Conference will be held in Singapore, 27 – 29 April 2009.

    The theme for the conference is cold chain – for temperature control in transport of foods, pharmaceutical and industrial applications. This conference aims at highlighting the most recent and exciting developments in the cold chain area. IIR commissions involved in the conference include B1, B2, C2, D1 and D2.

    Dr David Tanner, Chairman of the Scientific Committee, said about this event:

    “Being the 1st IIR international conference specific to cold chain this will be a unique opportunity to pull together experts and industry players from around the world to discuss the latest research, issues facing the industry and gaining an updated overview of what the future holds. ”

    “On behalf of the organising committee for the 1st IIR International Cold Chain Conference, I am pleased to invite you to participate in this exciting event that will take place in Singapore in April 2009. We look forward to welcoming you to Singapore.”

    The following topics will be considered for oral and poster presentations:

    · Predictive tools for cold chain optimisation
    · Sustainable cold chains - food and pharmaceuticals
    · Energy efficiency - food and pharmaceuticals
    · Carbon foot printing for supply chains - food and pharmaceuticals
    · Food safety in the cold chain
    · Microbiology in the cold chain
    · Technologies for cold chain monitoring - food and pharmaceuticals
    · Cold chains for developing countries - food and pharmaceuticals
    · Refrigeration in retail and in the home
    · Consumer trends in chilled and frozen products
    · Non-food cold chains (including pharmaceutical products)
    · Innovative cold chain equipment design
    · Quality in the cold chain
    · Innovative storage and transport systems
    · Refrigerants and refrigeration in 2030
    · Criticality for international distribution - food and pharmaceuticals

    Conference information:

    Venue/Location - Suntec Singapore International Convention and Exhibition Centre, 1 Raffles Boulevard, Suntec City, Singapore
    Language – The conference will be held in English. Simultaneous translation will not be provided.
    Deadline for two-page abstract to be received - October 26, 2008
    Deadline for final (reviewed) two-page abstract - March 13, 2009
    Full paper submission - April 27 to 29, 2009
    Cold Chain conference - April 27 to 29, 2009

    For further information please visit the official conference website at http://www.airah.org.au/iir-coldchain09.asp or download the flyer at http://www.airah.org.au/flyers/IIR09ColdChainFlyer.pdf .

  • 09Sep

    The report of the National Innovation Review is now available here.

    Relevant recommendations to the food and agricultural businesses are:

    The existing R&D Tax Concession (the 125 % Tax Concession, the 175% Premium, the R&D Tax Offset and the International Premium) should be replaced with a Tax Credit in order to raise the level of business expenditure on R&D by providing a less complex and more predictable support mechanism. A 40 percent Tax Credit should be available to large firms with a refundable Tax Credit of 50 percent available to smaller firms with turnover under $50 million. All R&D undertaken in Australia which meets relevant definitions be eligible for the tax credit.

    R&D expenditure undertaken in Australia by foreign-owned firms be eligible for the 40 percent Tax Credit but excluded from the refundable Tax Credit.

    A Competitive Innovation Grants Program should be introduced to assist innovative firms, with limited access to capital, in the high risk, proof-of-concept and development stages. This program would be targeted at projects addressing identified national priorities for innovation. Successful firms would be required to repay grants from the royalties or earning streams accruing from commercial success. The program would seek to assist 200 innovative firms annually at a cost of $150 million per year.

    The COMET program be expanded and continued for another 5 years, noting the strong linkages to the Enterprise Connect initiative. A funding increase of at least 25% would maintain the levels of service and provide wider coverage across Australia. Further increases to extend the programme’s coverage should be considered in conjunction with the evolution of the Enterprise Connect network.

    A pilot linkage voucher scheme be introduced via the existing Enterprise Connect and COMET program to improve innovation linkages between small and medium sized enterprises and the research community. Each voucher would be worth up to $15,000 and would be used to fund collaboration between small firms and public sector research organisations. The program would link 5,000 firms per year to public research agencies at a cost of $50-$75 million per year.
    The Innovation Investment Fund program be maintained, with a fourth round implemented after 2012. To facilitate effective monitoring of the impact of government support to grow early stage ventures in Australia, adequate data on investee firms supported through the program should be collected to support robust longitudinal analysis. Ten new funds over five years to be established at a cost of $300 million over 15 years.

    The Australian Government immediately establish a second round of Pre-Seed Funds. In further rounds the current absolute $1 million cap per investee firm should be changed to a maximum $1 million cap on the first tranche of investment, recognising the high risk nature of this early stage of investment where the availability and timing of alternative follow-on investment is uncertain. Four new funds should be established at a cost of $100 million over 15 years.

    The National Innovation Priorities recommended by the Review panel are:

    1) AGRICULTURAL AND FOOD SECURITY (emphasis on the development of nutraceuticals, food safety and certification and biological testing).

    2) CLIMATE CHANGE MITIGATION AND ADAPTATION .

    3) POPULATION HEALTH.

    4) TROPICAL SOLUTION.

    5) BROADBAND APPLICATIONS (especially in health,education and public data access).

    The second tier of recommended areas are:

    1) Resource industry

    2) Space & Astronomy

    3) Finance and risk management

    4) Marine industries

    It is further recommended that “National Innovation Priorities, as set out in this review, be a focus of innovation policy and activities and the National Innovation Council be charged with ongoing evaluation of the alignment of public innovation policy with National Research and Innovation priorities“.

    Further, the panel refers to the reductions in CSIRO staff numbers (particulalry in the agribusiness area) as “regrettable” in the context of global food shortages and CSIRO’s potential to produce more nutritious food in an environmentally sustainable way. Therefore, the Panel recommends restoration of funding levels in publicly funded R&D organisations.

    The Panel sees as a priority that the Australian Government should develop a national rural innovation strategy to:

    • Ensure optimal outcomes are gained from public investment in rural R&D including improved delivery of research and development directed at issues of national public concern.

    • Determine where public investment is needed to achieve greater effectiveness and efficiency in agriculture and food supply chains, taking into account the work being done by the Primary Industries Ministerial Council

    • Reduce the duplication of research activity through institutional consolidation to promote administrative efficiency and critical mass

    • Review existing rural R&D levy arrangements and contribution levels, including contributions made by both industry and government, to ensure the effective delivery of research and development to meet the demands of both public and private interests.

  • 08Sep

    The Logistics Development Award (LDA) is an annual award offered by the Logistics Association of Australia Ltd (LAA Ltd) and sponsored by CHEP Asia Pacific. For many years, the LDA has been at the forefront of Australia’s supply chain awards. It provides an outstanding opportunity for logisticians to develop their personal skills and knowledge by enabling the winning candidate to travel overseas and witness the latest logistics trends. The LDA is open to logisticians at all levels of their careers.

    The 2008 LDA major prize winner will attend the Annual Conference of the Council of Supply Chain Management Professionals, the largest industry conference on the international calendar. The 2008 Conference will be held in Denver, Colorado, USA from 5-8 October and promises to be the global logistics event of the year. The award includes all expenses related to attendance at the Conference and site visits of the winner’s choice before or after the Conference.
    Applicants for the LDA are required to submit a paper on either:
    • the most significant supply chain trend that they see affecting business in Australia, OR
    • the most successful innovation in logistics or the supply chain in which they have been involved.
    As part of the selection process, applicants are asked to give a presentation on their chosen topic to representatives of LAA Ltd.

    This year’s award goes to Dr Silvia Estrada-Flores, for her paper “Sustainable Co-Innovation in the Australian Food Supply Chain”. The winning entry can be found on the LAA website www.laa.asn.au under the Awards & Scholarships page.

    I would like to thank CHEP and LAA for providing me with this learning opportunity. I feel humbled and privileged in joining this fantastic group of men and women that have dedicated their work to the betterment of the logistics sector” Dr Estrada-Flores said.
    It is particularly encouraging that CHEP has supported the Australian logistics professionals through difficult times such as these, which are presenting the manufacturing industries (particularly the food sector) with complex environmental and financial challenges. I am delighted by this opportunity to contribute with my experiences during the CSCMP conference and the site visits. My plan of action is focusing on the logistics of perishable foods, but I will report on any significant trends that relate to other industries”.

    Brad Harrison, President of LAA said “The LDA Award with the support of CHEP not only enables an individual to attend the CSCMP conference but it assists in bringing back new ideas and trends that can be presented to other members via the various dinner events and written publications. Again this year there were quite a few quality applicants for this hotly contested award. I congratulate Silvia and look forward to hearing about the learnings.”